- However, given the
cost associated with the migration of the B.yond set-up box, as well as higher
content and financing costs, EBITDA margin shrank to 33% from 36%. This led to
a weaker bottom line. Customer acquisition cost stood at RM612.

- The customer base
has grown to 3.5mil (52% penetration rate) from 3.1mil. Management highlighted
that migration to the B.yond set-up box is well on track for completion by
FY14.

- Astro On-The-Go
(AOTG) service is presently available in Melbourne, targeting Malaysian living
abroad. Other potential markets for AOTG include Singapore and the UK. Existing
Astro subscribers pays RM25/month, while non-Astro subscribers pays RM30/month
or RM5/day.

- Select-TV's recent
launch on an IPTV product via Emagine-TV is unlikely to be a huge threat to
Astro. This is underpinned by Astro’s competitive advantage as a superior
content provider.

- Post-FY13 result
adjustments, earnings are expected to expand by 10%-27% for FY14F-FY16F. Our
estimate assumes ARPU hitting RM98 in FY14F. We have assumed DPS of 6.9 sen and
7.6 sen for FY14F and FY15F, respectively – in line with the group’s guidance of
paying out 75% of earnings.

- Underpinned by
Astro’s compelling and superior content portfolio, we are positive on Astro. Furthermore,
Astro has a strong growing franchise value backed by a virtual monopoly in the
Pay-TV segment nationwide.

- However, capex
cycle has not stabilised, in our view. Our estimates suggest free cash flow is
expected to rise meaningfully beyond FY15F as capex would have peak by then.